Board of Regents don’t see eye-to-eye on approval of coaching contracts

A new proposal would give the University president the final say in Gophers coaching contracts.

The University's Board of Regents talk at a meeting on June 10, 2016. Regents voted 8-1 Thursday to approve the contract of head football coach P.J. Fleck.

Zach Bielinski, Daily File Photo

The University’s Board of Regents talk at a meeting on June 10, 2016. Regents voted 8-1 Thursday to approve the contract of head football coach P.J. Fleck.

Kevin Beckman

Despite approving the largest coaching contract in school history last week, the University of Minnesota’s Board of Regents is divided over whether they should approve large coaching contracts.

Regents have debated for months over whether they should approve high-dollar coaching contracts — like P.J. Fleck’s five-year, $18 million contract approved in an 8-1 vote Friday. A proposal to strip regents of the ability to vote on large coaching contracts and give the University’s president final say in contract offers was proposed at a Thursday board meeting.

The proposed amendment divided the committee. Some regents said it represented good governance while others claimed it was irresponsible.

“It doesn’t allow the board to exercise their fiduciary responsibilities,” said Regent Michael Hsu. “It’s bad policy.”

The proposal is an attempt to clear up confusion over the board’s role in coaching contracts.

The amendment would negate current policy, which states regents can choose to vote on any commercial transaction, including employment contracts, of great public interest or valued over $2 million.

Prior to 1995, regents had the authority to OK coaching contracts, but that language was replaced with the current policy in July 1995.

The new proposal would prohibit board votes on coaching contracts unless the University president deems it to be in the public’s interest.

If the president, according to the proposal, thinks an appointment will have “substantial financial impact or generate significant public interest,” he or she will discuss the appointment with the board chair and vice-chair and decide if regents should vote on it.

“To be perfectly honest, any president who isn’t going to bring the board in to spend that kind of money is crazy,” said Regent Laura Brod.

The proposal comes amid pressure from state legislators for regents to approve such contracts. As it lobbies the state for a more than $147 million increase in taxpayer funds, University leaders have faced questions about athletics funding and coaching contracts this session.

At the same time, lawmakers have made the questions of board approval of coaching contracts a focus in the upcoming selection of four new regents.

Rep. Gene Pelowski, DFL-Winona, a House Higher Education Committee member, said taking away board authority to authorize expensive employment contracts could negatively impact the school’s funding from the Legislature and weakens the regents’ power.

“It soils the University on every level, makes everyone look bad, and I really don’t think the regents understood the totality of these contracts,” he said. “You’re adding a new payment of a new coach, paying the coach that’s no longer coaching … add to it the recent scandals and you’ve got a trifecta from hell.”

Kaler said the amendment would bring much-needed clarity to board policy, but added he is open to changes.

Regent Richard Beeson said he approved of the amendment’s language, saying it showed a good balance of the board’s responsibilities.

He said if regents approve coaching contracts, the relationship between the board and coaches is altered, raising ethical concerns.

“I think there’s some unintended consequences we should be thinking about at the same time,” he said.

Brod said coaching contracts shouldn’t be singled out for approval by the board because athletics isn’t part of the University’s core mission, but a financial threshold for board approval is a good idea.

“I think calling out specifically coaches in the policy would be an unfortunate direction to go,” she said. “But I do think that the fiduciary responsibility of those salaries … is critical for us as well.”

But Hsu said athletics are a crucial component to the school’s outreach mission.

“It is a very critical part of our overall brand, which draws in applications and donations,” he said. “A lot of students make a determination on where they want to go to school based on the athletics programs.”

Hsu proposed a memorandum, which was tabled, last spring to give regents authority over large employment contracts, including those like Fleck’s. It mentioned setting a dollar-amount over which the board would have the authority to approve a contract.

After feedback from committee members, regents decided to rework the language of the amendment and vote on a finalized version at their meeting in May.

“I understand the board has an important fiduciary responsibility and should be looking at high-value, high-dollar contracts,” Kaler said.

Board approves Fleck appointment

The full board voted Friday to approve the appointment of P.J. Fleck with an 8 to 1 vote.

Regent Abdul Omari voted against the appointment. Regents Patricia Simmons, Linda Cohen and Tom Devine were absent from the vote.

Fleck’s contract is the largest in Gopher sports history and makes him the highest-paid state employee.

Omari declined to comment on his vote.

Included in Fleck’s contract is a $100,000 bonus for winning the Big Ten West, $150,000 for a Big Ten championship, $200,000 for a college football playoff appearance and an extra $100,000 for winning the national title.

If Fleck is fired without cause, buyouts range from $9 million before the 2018 season to $1.5 million prior to the 2021 season.

To finance Fleck’s 5-year, $18 million contract and buy out former coaches’ contracts, Kaler said approximately $5.6 million will have to be borrowed from the University’s central reserves.

“We don’t have a final number because all the dust hasn’t settled,” Kaler said.

Kaler said the loan will be paid back with Athletics Department revenue over the next two years. He said he expects Fleck’s appointment to increase ticket sales and advertising revenue.

“We feel in the context of a $105 million overall budget that these are challenges the athletics finance people can process moving forward,” Kaler said.

Regent Michael Hsu voted against Fleck’s appointment in committee on Thursday, saying he hadn’t seen a detailed financial plan explaining how the University would pay for the buyouts of former coaches and the hiring of Fleck.

Since administrators provided such a plan between Thursday and the Friday vote, Hsu voted in favor of Fleck’s appointment.

“I believe that … that loan will be quickly repaid with the additional revenues that we hope to get,” Hsu said.